Freight rate hike to hit key commodities

Railway minister Suresh Prabhu took advantage of benign inflation to hike the freight rates of key commodities such as grains, pulses, coal, cement, iron and steel by as much as 10 per cent.

By Our Special Correspondent in Calcutta
  • Published 27.02.15
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Calcutta, Feb. 26: Railway minister Suresh Prabhu took advantage of benign inflation to hike the freight rates of key commodities such as grains, pulses, coal, cement, iron and steel by as much as 10 per cent.

The new rates will come into effect from April 2015, adding Rs 4,000 crore to the railways' coffer. The move is in line with Prabhu's populist predecessors, who spared passenger fares and increased freight rates to shore up sagging resources.

The railways are hoping to mop up Rs 1,21,423 crore from goods movement in the next fiscal through the rationalisation of rates, commodity classification and distance slabs.

The freight rates for coal will rise 6.3 per cent, while those for iron ore and steel will go up 0.8 per cent. Charges to move urea and grains will increase 10 per cent.

Experts said the increase in coal freight might lead to a 2.5-3 per cent increase in the cost of coal at the consumers' end. This may push up electricity tariff since thermal energy contributes 70 per cent to power generated in the country.

Coal consumers already pay additional rail levies such as busy season and congestion surcharges.

Prabhu defended the move, saying such rate revisions go on around the year. He added that there was no justification to increase passenger fares in a year diesel prices had fallen. "We have only rationalised the freight rates. For some sectors, rates will come down while overall it (impact) is very small."

The budget papers revealed that the rate for commodities such as limestone, dolomite and manganese ore will be down 0.3 per cent, while diesel freight will drop 1 per cent.

Fertiliser minister Ananth Kumar said the prices of urea delivered to farmers would not go up, indicating that the additional burden will be borne by the government as increased subsidy.

The railways are hoping to carry 85 million tonnes more in 2015-16 than the current fiscal. As on December 31, 2014, the railways carried 806.38 million tonnes cargo compared with 767.23 million tonnes in the same period last year.